16th October 2018 Press Release from InfolinkGazette - London Stock Exchange (LSE) Profit Warnings for September 2018
Figures released today By Business Information Publisher InfolinkGazette, revealed 19 London Stock Exchange Profit Warnings during September 2018. The listed companies issuing profit warnings in September included: utility, SSE PLC, blaming the weather and higher than expected gas prices; luxury drinks company Diageo PLC, who blamed Emerging Market FX; the retailer MOSS BROS GROUP PLC, where efforts to mitigate footfall issues haven’t delivered; tour operator Thomas Cook Group PLC, citing over capacity; and, Insurer, RSA Insurance Group PCL, who reported an underwriting loss in the UK market
Greg Connell, Managing Director of InfolinkGazette commented, “despite the increasing media coverage on the subject of macro-economic uncertainty, profit warnings volumes, remain fairly constant” Greg added, “the majority of Trading Updates to the London Stock Exchange contain a ‘Brexit Uncertainty’ caveat, but most listed companies continue to expect to meet or beat earnings expectations”.
4th September 2018 Press Release from InfolinkGazette - London Stock Exchange (LSE) Profit Warnings for August 2018
Statistics released today by InfolinkGazette, revealed only 11 LSE Profit Warnings for August 2018. The listed companies issuing profit warnings during the month included: Spire Healthcare, the 2nd largest provider of private healthcare in the UK; retailers Card Factory and Crawshaw Group (Butchers), blaming lower footfall; plus, luxury goods manufacturer Mulberry, pointing the finger at House of Fraser stores.
Greg Connell, Managing Director of InfolinkGazette commented, “The August profit warning volumes are below half the normal monthly totals; CEOs don’t make profit warnings when they are away on holiday.”
Press Release from InfolinkGazette on 03/08/2018 - London Stock Exchange (LSE) Profit Warnings for July 2018
Statistics released today by InfolinkGazette, revealed 27 LSE Profit Warnings for July 2018. The listed companies issuing profit warnings during the month included retailers: Dunelm Group plc, who blamed losses at the Worldstores businesses; Ocado Group PLC, despite rising sales; DFS Furniture PLC, blaming the arrival of products from the Far East; and McColl's Retail Group plc who blamed intense cost pressures.
Greg Connell, Managing Director of InfolinkGazette commented that “Retail was the most prominent sector for profit warnings in July, but profit warnings are being issued in most sectors, including: Utilities, Pharmaceuticals, Building Supplies, Manufacturing, and Technology.
1st July 2018 Press Release
LSE Profit Warnings for June 2018
Statistics released today by InfolinkGazette, revealed nineteen London Stock Exchange Profit Warnings for June 2018 - almost 1 profit warning per working day. The listed companies issuing profit warnings included hard pressed high street retailer Debenhams PLC, builders McCarthy & Stone, and estate agents Berkeley and Countrywide.
25th June 2018 Press Release
A Debt Laden Distribution Sector Piles on the Misery for Unsecured Creditors
A preview of the half yearly statistics from InfolinkGazette reveals that in the first half of 2018, unsecured creditors have racked up the equivalent of almost 3 full quarters worth of losses, with unpaid/unsecured credit losses of almost £2.7 billion from UK insolvencies.
Unsecured creditors losses are up an astonishing 26% on the corresponding period in 2017, leaving each creditor with average debts of £33,500, up 19.6% on the running average of £28,000.
Preferred Creditors and Secured Charge holders are the priority creditors in any insolvency and after they have been paid, the average asset shortfall for unsecured creditors was £514,000, up 3% on the running average of £499,000.
Commenting on the statistics, Greg Connell, Managing Director of InfolinkGazette, said “these figures include a number of high profile failures in the distribution sector, most notably: Maplin; Toys R Us; Palmer & Harvey McLane, but even without these high-profile cases, there is discernible upward trend in the value of creditors losses in insolvency situations.”
Greg added, “many businesses in this sector are not just ill-fated by their inadequate response to changes in consumer purchasing trends, they are doomed by the way they were funded, with debt instead of equity. Investors are often able to continue to extract returns through interest charges, instead of relying on dividends from profits, or increases in the overall value of the enterprise, whilst unsecured creditors, and institutional investors, who are the property owners, take the hit at the point of insolvency.
Commercial, County Court Judgments (CCJs) are also on the increase. Q1 2018 figures released from RTL, show a surge in England & Wales Business CCJs. The 2018 volumes are up 8% over Q1 2017 to 33,010; and, the total value is up 25% to £105.1m; the average value of a business CCJ is up 16% to £3,183.
Creditors in England & Wales have faced the first adverse trend in County Court Judgments (CCJs) for eight years, during 2017, and that trend looks set to continue in the 2018.
Greg commented, “there is more widespread evidence of increasing levels of financial distress, and risk professionals are paying much closer attention to how their debtors are financed and looking to reduce exposure to highly leveraged debtors, and, or, where the holders of the debt, the de facto owners of the business are only extending finance on secured terms.
Greg added, “If a director & shareholder, or a Person of Significant Control (PSC) held a debenture over the assets of their private limited company, suppliers would think twice about extending open credit, when the owners, who run and control the business, won't take the same risk; so, why treat VC funded enterprises any differently?”
8th May 2018 Press Release
Dark clouds on the horizon that could settle over the UK
The first quarter 2018 statistics from InfolinkGazette show a 40% increase in the total claim value of unsecured creditors in UK company liquidations and administrations.
The average first quarter total claim value over the last 5 years has been £1 billion, but leaped £0.4 billion to £1.4 billion in Q1 2018. The number of unsecured creditor claimants remained consistent with the running average quarterly norm at 44,000.
Commenting on the quarterly figures, Greg Connell, Managing Director of InfolinkGazette, said “This is the first significant Q1 variance since we started collecting the data in 2012, and the first time the average unsecured creditor claim value has exceeded £32,000.”
Creditors in England & Wales faced the first adverse trend in County Court Judgments (CCJs) for eight years, during 2017, according to figures from Registry Trust (RTL), and that trend looks set to continue in the first quarter of 2018. Commenting on the trend, Greg Connell, said “although there are no official figures yet from RTL, early estimates from the Credit Reference Agencies (CRAs), who use CCJs in their credit risk scorecards, indicates another increase in both the value and volume of CCJs, so far in 2018, and consequently, more financially distressed businesses”.
In 2017, 105,633 CCJs were registered against businesses in England and Wales, up 30 percent on 2016 and the first year-on-year increase since 2009. The average value of a business CCJ fell 16 percent to £2,983, but the total value of business CCJs rose 10 percent to £315 million, reversing an eight-year downward trend.
Greg Connell, commenting on the adverse CCJ trend said, “this correlates with the trend from UK insolvencies and we believe trade creditors will incur higher levels of losses and credit insurers will see a higher value and volume of claims because the number of financially distressed businesses are on the increase.”
Figures released by the Office for National Statistics (ONS) on 27/04/2018 showed UK gross domestic product (GDP) was estimated to have increased by 0.1% in Quarter 1 (Jan to Mar) 2018, compared with 0.4% in Quarter 4 (Oct to Dec) 2017. UK GDP growth was the slowest since Quarter 4 2012, with construction being the largest downward pull on GDP, falling by 3.3%. Production increased by 0.7%, with manufacturing growth slowing to 0.2. The services industries were the largest contributor to GDP growth, increasing by 0.3% in Quarter 1 2018, although the longer-term trend continues to show a weakening in services growth.
Commenting on the ONS release, Greg Connell said, “we seem to be entering a new risk climate, and when you add a stall in economic growth, together with an adverse trend in commercial CCJs, and a pronounced adverse increase in the value of unsecured creditor claimants, the reasons for taking out trade credit insurance begin to crystallise.”
The ending of cheap loans taken on by Britain’s banks hasn’t had sufficient time to affect the Q1 results, but the closure of the Term Funding Scheme (TFS) could make business finance harder to find and more expensive.
Banks borrowed £127bn under the Term Funding Scheme (TFS), which closed on 01/03/2018, according to Bank of England data.
The scheme delivered a stream of almost interest-free loans to banks to aid the pass-through of interest rate cuts to the real economy.
Rating agency Moody’s estimated that banks would have to pay more than £800m in extra interest costs to make up for the loss of funding, with challenger banks the most severely affected.
Greg commented, “The end of the scheme is expected to prompt a rise in borrowing costs for businesses, which will mean more business debtors will be unable to pay their bills when they fall due - bad news for lenders, and trade suppliers.”
14th March 2018 Press Release
Businesses in England and Wales faced the first adverse trend in County Court Judgments (CCJs) in eight years, during 2017, according to figures released this week by Registry Trust. In 2017, 105,633 CCJs were registered against businesses in England and Wales, up 30 percent on 2016 and the first year-on-year increase since 2009. The average value of an adverse business CCJ fell 16 percent to £2,983, but the total value of business CCJs rose 10 percent to £315 million, reversing an eight year downward trend.
Greg Connell, Managing Director of InfolinkGazette commenting on the Registry Trust Statistic said, “an increase in the volume and overall value of Business Judgments is an indicator of higher levels of financial distress, which means more risk for trade creditors and potentially more claims for credit insurers to pay out on.”
Greg added, “It’s also a timely reminder, if there hadn’t been enough already, with the recent high profile insolvencies, and over £4 billion of unpaid creditors - of the reasons for taking out trade credit insurance, if judgments are on the increase that means more businesses debtors have been unable to pay their bills when they have fallen due, which is bad news for lenders, and trade suppliers.”
10th January 2018 Press Release
Annual statistics from InfolinkGazette show that there were 180,000 unpaid and unsecured creditors from UK company Liquidations and Administration in 2017, with total losses of £4.2 billion.
Unpaid and unsecured creditors lost an average of £23,000 each time they took a hit from insolvent customers going out of business owing money. Over 87,000 unsecured creditors were hit more than once, with losses from more than one failing customer.
Almost 9,000 of unsecured creditors had already reported a negative net worth in their latest filed accounts, before incurring the 2017 loss, and InfolinkGazette estimate a further 17,000 unsecured creditors are placed at risk of their net worth turning negative because of their losses. 5,500 of these companies are at severe risk of business failure as a direct result of losses to unsecured creditors.
Preferred Creditors and Secured Charge holders are the priority creditors in any insolvency and after they have been paid, the average asset shortfall for unsecured creditors is £499,000.
Greg Connell, Managing Director of InfolinkGazette commented: “less than 10% of losses are covered by credit insurance policies, which would have paid out 90% of losses; failing to insure leaves creditors with pay-outs averaging just 9 pence in the pound, which results in the same pattern of failure repeated each year, with Insolvent businesses taking down otherwise healthy, but uninsured businesses, that can’t stand the losses incurred when an important customer fails.”
Greg added, “while interest rates remain low on a wide range of corporate finance options, some unsecured creditors can break out of the circle of failure by refinancing, but as interest rates rise, this will become much harder”.
For further information, call Greg Connell on 07753739752
13th September Press Release from InfolinkGazette
Unsecured Creditor’s Individual losses increase in Q3 2017
An analysis of the 3rd Quarter Insolvency Statistics from InfolinkGazette reveals that the individual unsecured creditor losses on each insolvency have increased from an annual average of £23,000 per insolvency to £29,000.
On average, creditors of Company Voluntary Liquidations are losing £28,000 on each Liquidation and creditors of Company Administrations are losing £32,000 on each Administration their customers enter. This contrasts with the average value of a commercial County Court Judgments, which has fallen to £2,800, less than 10% of the value of an average unsecured creditors loss.
Greg Connell, Managing Director of InfolinkGazette commented that “At least with unsecured creditors of corporate insolvencies, we know who the creditors are and can offer vital risk management solutions, such as Trade Credit Insurance, whereas CCJ creditors are completely anonymised.”
Greg added, “Subscribers to the InfolinkGazette unsecured Creditors information can now also receive a complete information package, including downloading of company documents and summary Business Information Reports”.
11th July 2017 Press Release from InfolinkGazette
Unsecured Creditor losses top £2.2 billion in the first half of 2017.
An analysis of the last 6 months’ insolvency data from InfolinkGazette reveals that the 96,200 unsecured creditors listed in the last 6 months, incurred losses exceeding £2.2 billion; the average overall shortfall for creditors in each insolvency, stands at over £450,000.
Despite annual Insolvency Appointments running at, or near a six-year low, unsecured creditor continue to lose money, with the average dividend paid to Unsecure Creditors by Insolvency Practitioners, hovering around 9% (9 pence in the pound).
Greg Connell, Managing Director of InfolinkGazette commented that “if recovery levels from asset disposals continue to run at historical rates, Unsecured Creditors can expect to realise losses of over £2 billion.”
Greg added, “unsecured creditor losses are not just an outcome of insolvencies, they are a driver of new insolvencies, as creditor businesses face the double whammy of lost current, and future cash flows”.
Unsecured Creditor losses fell disproportionately on business that can least afford to cover the losses; 8,400 of the Unsecured Creditors with the weakest balance sheets, incurred losses of £435 million. The average losses of the weakest unsecured creditors (based on financial strength) were more than double the national average at £51,800 versus average losses of £23,000.
Commenting on the analysis, Greg Connell, said "It’s ironic that the burden of losses from corporate insolvencies falls most heavily on the businesses that are least able to sustain the losses; some of the reasons why this seems to be happening to the weakest creditors are: becoming overly dependent on a small customer base; growth fuelled by debt rather than equity; a lack of emphasis on credit management.
Greg added, “This is the first time in over 5 years, researching unsecured creditor losses that we have seen factors pointing to potential growth in insolvency rates, making credit insurance more important than ever. “
16th May 2017 Press Release from InfolinkGazette
Unsecured and Uninsured Creditors incur Multiple and Unstainable Losses.
An analysis of the last 12 months’ insolvency data from InfolinkGazette reveals that the annual total, for unpaid/unsecured credit losses, continues to run at almost £4 billion, with the average shortfall for creditors in each insolvency, standing at over £450,000.
Most unpaid creditors incur 2, or more unsecured losses each year, even though annual Insolvencies are close to a six-year low. Not surprisingly, HMRC are an unpaid creditor in 7,196 of the 10,772 insolvencies analysed by InfolinkGazette, but there were 4 organisations, 3 Banks and 1 utility that were unsecured creditors in more than 500 of the 10,772 insolvencies in the last 12 months. A further 13 Banks, Utility Companies and Financial Service Providers were unpaid creditors in between 250 and 499 insolvencies, and 201 Banks, Utility Companies, Financial Service Providers, Local Authorities, and Trade Suppliers were creditors in between 100 and 249 insolvencies.
Commenting on the analysis, Greg Connell, Managing Director of InfolinkGazette said "At least half of the of the weekly £80 million in unsecured creditor losses can be attributed to ordinary Trade Creditors, and with the ABI, reporting Trade Credit Insurance Pay-outs of £4 million per week, it looks like 90% of Unsecured Creditor Loses are uninsured.
Greg added, “An analysis of the liquidity, gearing and solvency of all the unsecured Trade Creditors, indicates that 20% of unsecured Trade Creditors would be placed under considerable financial strain by just one additional unsecured loss, at the average value of £24,000; many of these businesses, will require an injection of capital to avoid insolvency themselves”.
5th May 2017 (Published by Registry Trust Ltd on 4th May 2017)
"MISSING" JUDGMENTS THREATEN GOOD LENDING
Fewer debt judgments were recorded in the Four Courts during the first three months of 2017 than in any other first quarter on record, according to figures released today by Registry Trust.
Registry Trust is the mission led organisation which operates as Irish Judgments in the Republic of Ireland, where it collects information on registered judgments against businesses and consumers. A judgment is incontrovertible proof of unmanaged debt.
There were 535 judgments registered against consumers in Q1 2017, three percent fewer than the same period last year. It marks the fourth consecutive year of decreases and is the lowest figure recorded for a first quarter since 2008. The average value of a consumer judgment dropped by 45 percent to €78,447, bringing the total down 47 percent to €42m.
The number of business judgments fell by almost half to 156 during the first quarter of 2017, the lowest first quarter since 2008. The total value also dropped sharply, falling 78 percent to €5.7m. The average business judgment accordingly fell 58 percent to €36,498, bucking the trend of increases during the preceding four years.
While the total number of judgments decreased for both incorporated and the generally smaller non-incorporated businesses, the total value of corporate judgments increased as it fell for non-corporates. The average corporate judgment was worth €48,568, whereas a non-corporate judgment was €5,776 on average.
The figures are based only on judgments registered at the request and cost of creditors at the Four Courts in Dublin and therefore provide only a partial picture of unmanaged debt judgments in the country. By comparison, in the much smaller economy of Northern Ireland, where judgments from all courts are registered, there were 1,970 judgments in Q1 2017.
“If we scaled up the Northern Ireland figures, we would expect over 5,000 judgments this quarter. As a rough estimate, therefore, there might well be some 4,500 unregistered judgments in courts around the country,” said Registry Trust chairman Malcolm Hurlston. “This mass of missing judgments represents a serious risk to credit unions and other lenders – and most of all their customers.”
In Q1 2017 Registry Trust received 8,080 requests to search the register for the Republic of Ireland online at www.trustonline.org.uk. Through TrustOnline anyone in Ireland may search for judgments and similar information registered against businesses and consumers anywhere in the British Isles and Ireland. “It is a unique benefit for consumers to be able to check the debt record of any person or business with which they may be transacting,” said Mr Hurlston. “Negative information would certainly make me think twice.”
Judgments against consumers Q1 2017 (compared with Q1 2016)
• Total: 535 (down three percent)
• Value: €42m (down 47 percent)
• Average: €78,447 (down 45 percent)
Judgments against businesses Q1 2017
• Total: 156 (down 47 percent)
• Value: €5.7m (down 78 percent)
• Average: €36,498 (down 58 percent)
Notes for editors
Irish Judgments is a division of Registry Trust, a non-profit company established in 1985. It maintains public records of judgment and decree information for all jurisdictions in Britain and Ireland. These records are an important factor in avoiding debt and in supporting responsible lending decisions, which in turn underpin a modern and stable economy.
Irish Judgments holds a public register of judgments registered at the Four Courts in Dublin.
Judgments can be removed from the register if paid in full within one calendar month of the issue date and Irish Judgments is informed, but will otherwise remain registered for six years. If fully paid outside the one calendar month, the defendant can apply to have the judgment marked as ‘satisfied’ to improve their credit rating. Failure to pay within one month is proof of unmanaged debt.
Anyone may search for entries against a named person or business at a stated address or a corporate body in the Republic of Ireland, Northern Ireland, Scotland or England and Wales by visiting Registry Trust’s website www.trustonline.org.uk or by writing to Irish Judgments at Irish Judgments, Ulysses House, Foley Street, Dublin 1.
To view the full set of annual statistics, please visit www.trustonline.org.uk/press.
For more information about Registry Trust’s aims, structure and accountability as well as information about its range of products beyond the register of judgments please visit www.registry-trust.org.uk.
For more information, please contact Daniel Helen at email@example.com or call +44 (0)20 7239 4971.
1st March 2017
Barratts Trading liquidated with unsecured creditor losses of £11.3 million
InfolinkGazette puts the spotlight on one of the larger UK Creditor Liquidations of the year so far: 256 commercial unsecured creditors lost over £6.2 million when shoe retailer Barratts Trading Limited went in to liquidation this year; Liquidators, Duff & Phelps, reported the shortfall to HMRC at £680,000 and total assets available to preferred creditors were estimated to realise just £71,000.
Commenting on the liquidation, Greg Connell, Managing Director of InfolinkGazette said, “In its 5 year history, Barratts Trading Limited, never once filed a set of accounts, meaning unsecured creditors never really had a chance to make a fair assessment of the potential credit risk”.
28th November Press Release
Unsecured and uninsured Trade Creditors continue to rack up massive losses.
A preview of the half yearly statistics from InfolinkGazette reveals total unpaid/unsecured credit losses of over £1.9 billion for the second half of the year, up 6% on the first half of the year. 80,000 ordinary unpaid trade creditors (excluding 8,000 occurrences of HMRC as creditors) lost an average of £23,900, from 5,178 insolvencies. The average asset shortfall for unsecured creditors in each Insolvency was approximately £499,000.
Commenting on the analysis, Greg Connell, Managing Director of InfolinkGazette said "At least 20% of the unpaid creditors don’t have sufficient financial reserves to stand the losses they are incurring; almost 10% of the unpaid creditors are themselves insolvent and 15% have a working capital deficit.
Greg added, “with only 10% of unsecured creditor losses covered by a trade credit insurance policy and 20% of unsecured creditors not having the financial reserves to stand the trade credit losses, it is hardly surprising that unsecured creditors are more than 3 times as likely to enter insolvency proceeding themselves, when compared to rest of the business universe”.
8th August Press Release
Half yearly statistics from InfolinkGazette reveals total unpaid/unsecured credit losses of £1.8 billion for the first half of the year. 73,800 ordinary unpaid trade creditors (excluding HMRC) lost an average of £24,500, from just under 4,200 insolvencies. The average asset shortfall in each Insolvency was approximately £490,000.
Weekly unpaid creditor losses are running at the equivalent of £69 million per week with over 2,800 unpaid creditors, losing an average of approximately £24,500 on each insolvency.
Commenting on the analysis, Greg Connell, Managing Director of InfolinkGazette said "these statistics demonstrate enormous growth potential for the UK Trade Credit Insurance industry".
Greg added, "If you compare the InfolinkGazette total unpaid creditors losses with figures from the Association of British Insurers (ABI), showing the equivalent of £3m a week, £13,600 per claim, paid to 220 unsecured creditor claimants, then the ABI figures are indicating that less than 10% of unpaid creditors are covered by a Trade Credit Insurance policy.
18th April Press Release
A preview of the quarterly statistics from InfolinkGazette reveals total unpaid/unsecured credit losses of £960 million for Q1 2016. 38,700 ordinary unpaid trade creditors lost an average of £24,800, from just over 2,200 insolvencies.
Greg Connell, Managing Director of InfolinkGazette commented: the average surplus available for distribution to unsecured creditors after paying preferred creditors and charge holders was just £60,000, making it a poor quarter for unsecured creditors, who experienced average asset shortfalls of £440,000 per insolvency. Greg added, as ever, the majority of the burden falls on the unsecured trade creditors, highlighting the need to maintain trade credit insurance cover.
26th March Press Release
Monthly statistics from InfolinkGazette reveal 13,700 ordinary, unsecured and unpaid creditors in January with an average value of £21,300, totalling £292 million, compared to 12,800 in February, with an average value of £13,400, totalling £172 million.
8% of the unsecured and unpaid Creditors during the period under review had reported a negative net worth in their last filed accounts and 23.6% had reported a negative working capital.
Greg Connell, Managing Director of InfolinkGazette commented: the toxic combination of poor financial health, a lack of credit insurance and unsecured creditor losses, incurred as a result of customers going out of business, is in itself a factor in business failure. As we have previously reported, unsecured and unpaid creditors are more than three times as likely themselves to succumb to creditors liquidation, than the national average.
8th March Press Release:
Annual statistics from InfolinkGazette show that there were 182,000 unpaid and unsecured creditors from UK company Liquidations and Administration in 2015 compared to 134,000 in 2014 with total losses increasing from £8.4 billion in 2014 to £17 billion in 2015.
Unpaid and unsecured creditors lost an average of £95,000 in 2015, up £24,000 on the 2014 average of £60,500. Ordinary Trade Creditor losses from liquidations continue to average around £32,000.
Greg Connell, Managing Director of InfolinkGazette commented: it's hardly surprising that the biggest losers are HMRC, the Banks and Utility companies but every week there are over 2,000 ordinary trade creditors experiencing unexpected losses of over £30,000, when one of their customers enter liquidation.
In 2016 to date, the average assets available for preferred creditors were £18,600 and assets available for charge holders and unsecured creditors averaged £16,500; overall asset shortfalls averaged £307,000. Secured charge holders are generally left nursing a 71% deficit but unsecured creditors come of far worse and must contend with an average deficit of 87% on monies owed.
Greg Connell added: our research indicates that less than 10% of losses are covered by credit insurance policies, which would have paid out up to 90% of losses; failure to insure again trade credit losses generally leaves creditors severely out of pocket, with payouts to unsecured creditors averaging between 9% and 13% over the last 4 years.
For further information, call Greg Connell on 07753739752
4th December Press Release:
Monthly statistics from InfolinkGazette reveal 9,000 unsecured creditors from UK company liquidations in November 2015, with total losses of £300M, averaging £33K. There were a further 1,000 creditors from UK company Administrations, with total losses of £14m, averaging £14K
Almost 800 insolvent companies filed Statements of Affairs during the month and on average, they each declared unsecured creditors of more than £0.4M, down £0.1M on last month's figures.
After adjustments to deduct HMRC losses, Pension Protection Fund losses and Intercompany investments, total unsecured creditor losses from UK insolvencies, for the 3 months to end of November were £1.4 billion.
Greg Connell, Managing Director of InfolinkGazette commented: quarterly unsecured creditor losses of £1.4 billion contrasts sharply with the ABI trade credit industry reporting gross paid claims of £50.3m in the last quarter. If only £1 billion of the £1.4 billion losses would have qualified for trade credit insurance, the ABI figures indicate that 95% of insolvency related credit losses are uninsured. Even allowing for quarterly fluctuations in creditor losses and gross paid claims, there must still be a large unexploited market for credit insurance growth.
26th October Press Release:
Monthly statistics from InfolinkGazette show that there were 12,000 unsecured creditors from UK company liquidations in October 2015, with total losses of £430M, averaging £33K.
Over 800 companies entered liquidation during the month and on average, they each declared unsecured creditors of more than £0.5M, however the biggest losses by far were incurred by creditors of Regional & City Airports (Exeter) Holdings Limited, which went in to liquidation with debts of almost £50M.
5,000 of the unsecured creditors were analysed to identify their ability to absorb losses from unsecured creditors and 45% of unsecured creditors had a negative working capital and 7% were already insolvent, based on the latest financial statement filed at Companies House.
Greg Connell, Managing Director of InfolinkGazette commented: unsecured creditors who already have solvency or liquidity issues are the most exposed when it comes to absorbing losses from companies entering in to insolvency. Greg added, companies often enter liquidation without warning and even the most powerful predictive scorecards can only identify between 70% and 80% of business failures and often only months before the failure occurs, making it vital that debtors use a combination of credit information and credit insurance.
InfolinkGazette Tips for Cashflow Management.
Regardless of whether your organisations uses Credit Information Reports and or Credit Insurance, Credit Managers should always:
A) Set a credit limits for all customers. This can be based on the credit reference agency recommendation if you have requested a credit limit. Other methods include: after obtaining trade references, you can take an average of the high or current credit figure given by other suppliers, or from financial statements by setting the credit limit at anywhere between 5% and 15% of net worth. You should adjust any credit limit to take account of the golden rule (never to give any single customer more credit than you could afford to lose if the customer became insolvent and was unable to pay) and your own payment experience.
B) Make sure every customer has signed up to your terms and conditions and is in no doubt over the agreed credit terms. Check the paperwork from the sales person and if anything is unclear make it a priority to resolve before the goods are shipped.
C) Send invoices immediately after you have supplied the goods or service; don’t wait until the end of the month. Make a follow-up call to confirm that all the invoice details were correct and that there will be no problem paying it by the due date. If there are any queries over the order or the invoice, notify sales immediately and actively engage them in the resolution process
D) Check later payments daily and chase them up on the day they become overdue, always starting with largest debtors first.
E) Inform late payers that unless payment is received by an agreed date you will charge interest on the overdue amount. All businesses have a statutory right to charge interest on late payments, whether it is in their terms and conditions or not. The rate of interest is set at bank of England base rate plus 8%.
F) Formalise any revised agreement in writing and confirm to your customer in writing that you will be exercising your statutory right to interest on overdue accounts. Key to success is making sure that overdue customers put payment of your invoice ahead of any other supplier who might be pressing for payment.
G) If you haven’t been paid by 90 days, use a debt collection agency. A good debt collection agency will normally embark on an amicable collection phase that will yield favourable results well before you incur any of the costs of going down the legal route.
Finally, if an order looks too good to be true, it almost certainly is.
For further information, call Greg Connell on 07753739752
InfolinkGazette, the online provider of unsecured creditor data, has analysed 4,000 recent corporate liquidations and has found that the average value of realisable assets available for creditors of UK liquidations was just £15,967, leaving an average creditor overall shortfall of (£466,229). Preferred Creditors fare reasonably well, with a net realisation percentage of 81% - although only 22% were expected to be completely paid in full. However, the 80,000 unsecured creditors, who are third in line for a projected payout after preferred creditors and secured creditors, net a disappointing realisation of just 9%.
Greg Connell, Managing Director of InfolinkGazette commented “trade creditors can potentially reverse the loss ratio by taking out credit insurance; most credit insurance policies payout 90%, which compares to an average uninsured loss ratio of 91%. It is possible to take some comfort from recent falls in the number of annual liquidations but creditors need to remain vigilant to the dangers of customer insolvency because the resulting uninsured losses can be catastrophic”. Greg added, “Businesses that have become an unsecured creditor of a failed business are over 3 times more likely to succumb to business failure themselves than the national average”.
November 2013 PRESS RELEASE – The latest Q3 2013 research from InfolinkGazette, the UK providers of Unsecured Creditor information shows that UK companies enter liquidation with an average of 25 unsecured creditors. The average unsecured loss in Q3 2013 was £28,940, compared to the annual average of £43,000 and total Q3 Unsecured Creditor losses were just under £0.5 billion.
The average Shareholder Funds (Net Worth) of Unsecured Creditors as at Q3 2013 was £477,000, meaning the average unsecured credit loss of £28,940 reduced Shareholder Funds by 6.1%.
The average estimated Turnover (Sales excluding VAT) of Unsecured Creditors as at Q3 2013 was £3,529,500, meaning that just one unsecured credit loss, at the average of £28,840 is equivalent to 0.82% of Turnover.
The average Working Capital (Current Assets minus Current Liabilities) of Unsecured Creditors at Q3 2013 was £44,000, meaning that just one unsecured credit loss at the average of £28,840 would wipe out 65.8% of the Working Capital.
Greg Connell, Managing Director, commented, “these figures help to explain why unsecured creditors are 3.6 times more likely to fail than the national average – the average UK company simply doesn’t have the liquidity to be able to absorb the losses accruing from customers going out of business and in to liquidation. Greg added, “UK companies need a combination of accurate up-to-date credit information on their customers to help them avoid bad debt; fast response debt recovery to collect overdue accounts from at risk customers and trade credit insurance to mitigate against losses when they occur.”
For further information call Greg on 07753 739752
InfolinkGazette are the only online provider of unsecured creditor details, we digitise lists of unsecured creditors from UK Company Liquidations and provide unsecured creditor information to risk management professionals, who engage with unsecured creditors to deliver solutions that help mitigate against trade credit losses.
October 2013 PRESS RELEASE - InfolinkGazette are now adding Marketing Bureau information to lists of Unsecured Creditors and delivering Full Business Information Reports, complete with Credit Score, Rating and Credit Limit Recommendations.
InfolinkGazette customers can now access unsecured creditor lists that have been extensively augmented with Marketing Bureau information to ensure sales staff are supplied with the most comprehensive dataset available for new business prospecting. Sales and Marketing staff can now evaluate Unsecured Creditor new business leads, in the full knowledge of the prospects credit status, financial health, credit limit, size, industry and director level contacts.
Additional information is available online for any UK business by requesting the InfolinkGazette Business Information Report, containing: full financials; credit status explanation; directors details; shareholders and much more.
Greg Connell, Managing Director, commented, "the unsecured creditors from company liquidations are racking up colossal losses; the average loss per unsecured is approximately £43,000 and these losses are often large enough to jeopardise the financial security of the creditors themselves". Greg added "unsecured creditors are 3.6 times more likely to fail than the national average for business failures.
For further information call Greg on 07753 739752
June 2013 PRESS RELEASE - InfolinkGazette have now made it easier to obtain extra information about Unsecured Creditors. Plus we can now deliver Business Information on any UK company.
You can use the new Enhanced Download function to add additional segmentation data to Unsecured Creditor Prospects and ensure sales staff are supplied with director level contact names. Use the new InfolinkGazette Request Business Info option when you want to know more about customers, clients, or prospects to verify company status (Normal, Dissolved or Liquidation), check filing dates, see past and present directors, view the mortgages and charges register, or simply confirm that a company exists. Company liquidations may be slowing down but unsecured creditors are still racking up enormous losses; in the last 12 months InfolinkGazette have captured details of Unsecured Creditor losses totalling £2.9 billion.
For further information call Greg on 07753 739752